Singapore has stolen a march on the rest of the world. It appears to have solved the problem that’s blighting Western governments – how to run an efficient health care system that doesn’t cripple the exchequer.

It has the lowest rate of infant death rate in the world by most counts. The World Bank recorded Singapore infant mortality in 2009 at 2.3 deaths per 1,000 live births. (The UK recorded 4.6 deaths on the same measure, which is the principal gauge of a country’s health service.)

Life expectancy is also markedly better at 79 years for men and 84 for women (UK 77/82).

But the stunning feature is the extraordinary low spend in health care as a proportion of GDP – a mere 3.9 per cent, less than half the UK figure. That’s value for money.

What’s the magic?

Right-leaning health economists find the answer in the admirable way in which Singaporeans hold an interest in looking after their health. Personal responsibility is the driver.

Nearly all Singaporeans buy medical insurance through a state insurance scheme, Medisave. This fund broadly meets most big treatment costs. But crucially, Medisave accounts are tax-free, earn interest, and become part of the individual’s estate after death.

However, the account owner can withdraw money only to pay for approved categories of medical treatments, including surgery, hospital stays and some out-patient fees.

Medisave is financed from diverse sources. It is part of a mandatory government pension scheme and is funded jointly from central funds, from employers and from employees. So, in that respect it is not unlike National Insurance in the UK. But it is designed to be big enough to fund retirement and health care.

Additional state cover

In addition to Medisave, there is an additional state “top-up” insurance plan, MediShield. This can be used for chronic disease and some other conditions. In effect it is a national insurance scheme for major or prolonged illnesses that are not covered by Medisave.

However, despite this coverage, individuals still need to meet a proportion of all costs from their own pocket. This is an excess pure and simple, on the lines adopted by car insurers – or a form of co-pay or US-style “deductible”.

Safety net

There is a third “M” – Medifund, a means-tested benefit, based on an individual’s financial circumstances, to help the indigent. On top of the “3M” system, the government has added Eldercare, a fund for chronic disease in old age.

Hospitals

Singaporeans are not spooked by the obsessive British fear of creating a “two-tier” health care system. Even though most hospitals are nationalised (29 are state-run and 14 are independent) people in the state units can buy extra services. From single-bed wards to open multi-bedded wards, you choose and pay accordingly.

If Singapore can do it…

The good health of Singapore’s population relative to its low spend prompts the question as to why others cannot match the efficiency of the former British colony with a vibrant commercial history.

There can be little doubt that most Western politicians envy Singapore’s position. It has reaped the rewards of thinking ahead, while countries such as Britain are saddled with what David Cameron describes as an “unsustainable” system. (Polls show the British public remains fervently attached to its 63-year-old system, despite poor performance compared with those of its continental neighbours.)

However, Singapore does enjoy some advantages in addition to a system that incentivises people to stay healthy.

Countries such as Singapore with strong economies can be expected to emerge well from international comparisons on the proportion of GDP spent on health care because there’s more money to go round.

The country, too, is in a demographic sweet spot, with youth preponderant among its 4.7 million citizens.

Asian countries are better at looking after the elderly within the family setting; the high concentration of population in a small area aids health care planning.

Furthermore, the Singapore government has for some years reined in hospitals from buying state-of-the art medical equipment, undoubtedly reducing capital expenditure even if the effect on the health of its citizenry appears to be limited, if statistics are to be trusted.

The private sector

Singapore’s private medical sector has evolved as a centre of excellence for treating Western expatriates and wealthy Asians across tracts of the continent, including China. However, that is changing. China has raised its game, so fewer patients are airlifted abroad.

High bed prices in Singapore’s private hospitals and stories of “rip-off” fees charged by surgeons are taking their toll.Bupa International, the market leader, is certainly concerned. Dr Sneh Khemka, its medical director, believes that Malaysia, especially Kuala Lumpur, offers the new centres of excellence. They are attracting patients from across South-East Asia.

Dr Khemka commented: “Whereas Singapore used to be the default destination of choice, that has now shifted to Kuala Lumpur, and we are actively encouraging that. When it comes to quality standards in leading private hospitals, KL is on a par with Singapore.”

That view is based on Bupa’s own research and that of international audit bodies.

The high fees could jeopardise Singapore’s position at the top of the value-for-money table through a knock-on effect in the public sector.

“When it comes to prices, KL is still on average about a third of the cost of Singapore,” Dr Khemka said. “That is based both on doctors’ fees and the room-rate charge. For instance, take a knee arthroscopy (keyhole inspection). For an average package you would pay about US$12,000 in Singapore, whereas we’d be paying US$4,000 in Kuala Lumpur.”

Economic forces have forced down surgeons’ fees in KL. They are often salaried and expected to work to robust schedules. In Singapore, doctors are independent. They are not contracted. They have no schedule of fees and set their own rates.

State-of-the-art hospitals such as the Prince Court Medical Centre and Gleneagles Hospital, both in Kuala Lumpur, have helped enhance Malaysia’s reputation.

Shorter hospital stays in KL account for some of the contrast in prices. “There’s a lot more day-case surgery in Kuala Lumpur,” Dr Khemka said. “Often we’d see a patient discharged within a day. In Singapore they’d be in for an overnight stay for the same procedure. However, as for average lengths of stay for cases where you need to be an in-patient, I don’t think there’s a lot of difference.”

Bupa International has the largest customer base in the region and, according to Dr Khemka, is leading the drive away from Singapore. “Some of our competitors are beginning to understand and join in,” he added.

Singapore private fees 'settle’

However, not all UK-based insurers are persuaded of the Bupa line. InterGlobal, a fast-growing provider based in Farnham, Surrey, sees sanity returning in Singapore.

Stephen Hartigan, the company’s chief executive, said: “The trouble was that caps on consultants’ fees were removed by the government two or three years ago. Prices shot through the roof but market forces have tended to settle that down a bit.

“You have the state sector hospitals in Singapore – they are very good – and you get as good treatment there as you would at Raffles (a leading private hospital in the middle of the city said to have rooms equivalent to those of a five-star hotel). So we are encouraging people to go the state route [in Singapore] – but we don’t mandate people to do so.”

Premiums

Whether or not expatriates in Singapore follow Mr Hartigan’s advice and use the state system (most don’t) they will still need medical cover. His company, InterGlobal, comes out among the least expensive in a list of UK international insurance companies drawn up by Stephen Walker, of Medical Insurance Servicesin Brighton.

For a single man, aged 32, InterGlobal charges £1,322 a year for comprehensive cover (budget £851).AxaPPP’s comprehensive plan is less – £1,295 (budget £1,013).

Aviva International Solutions is also competitive at £1,371 comprehensive (budget £1,234). Medicare’s comprehensive plan, International Plus, costs £1,421 a year for the 32-year-old (budget £1,075).

For the same individual, Bupa International’s Classic is £2,125 a year (budget £1,151). IMG Global Select is expensive at £2,302 (budget £1,370).

As with all figures quoted, Mr Walker stresses that comparisons are never like for like because of variations in benefits, caps on claim totals and other factors. Furthermore, premiums offered by start-up providers tend to rise sharply.

For a couple in Singapore aged 41 and 39, the least expensive annual premium on Mr Walker’s recommended list is from Aviva International, at £3,018 (budget £2,716). Close by is AxaPPP at £3,026 (budget £2,366). Also competitive is InterGlobal. Its Ultra Comprehensive plan is £3,183 (budget £2,042).

IMG Global is by some way the most expensive at £5,433 (budget £3,396) – despite a 15 per cent starter discount, which also applies to its policy for a 32-year-old, quoted above.

Bird flu and respiratory disease

Respiratory diseases among expats are common in the Singaporean climate. The country’s health ministry showed that in one two-week period in May 2010 across the population as a whole, more than 17,000 people sought treatment for acute respiratory infections. Of these, almost four in 10 had contracted suspected H1N1 influenza, a general category that includes potentially fatal bird flu.

Avian flu has been on and off the health agenda for at least eight years. Cases have recently declined, but the virus has never disappeared completely.

Cleanliness and health-awareness are key considerations. David Pryor, senior executive of Medicare International, an expat insurer active in South-east Asia, said: “Like most places in the world, there are outbreaks of potentially life-threatening diseases, such as influenza, but Singapore’s cleanliness ensures they are kept to an absolute minimum.

“Hygiene is one of the main ways influenza is controlled, so regular washing of hands is important. Also, to help avoid bird flu, you should ensure poultry eaten is well cooked before eating. Whilst the bird flu threat has subsided, we would still advise policyholders to be vigilant when travelling within the region. Vaccination advice and precautionary measures should be followed.”

For tourists, there is no shortage of entertainment in Singapore. But health economists and politicians wrestling with budgetary problems could also have fun here – and learn something into the bargain.